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TV forecast to lose out on global ad spend

19-July-2005
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TV forecast to lose out on global ad spend

Television's share of the global advertising market will fall this year, probably marking the start of a long-term decline, a leading industry forecaster says.

The prediction is significant because as recently as April, the forecaster, Zenith- Optimedia, said TV's global market share would rise this year and next, before falling.

However, it said weakness in the US, Japan and the UK had prompted it to lower its TV forecast. It predicted global TV spending of $148.2 billion this year, down $2.3 billion from April, reflecting cuts of $1 billion in the US, $1 billion in Japan and $229m in the UK.

TV's global market share will fall from 37.5 per cent last year to 37.3 per cent this year, it said.

TV's market share has dipped before notably during the turmoil created by the 1990s internet boom and bust. But ZenithOptimedia said television "may now be beginning a long, newspaper-like decline".

"I would bet that TV has peaked," said Adam Smith, head of knowledge management at ZenithOptimedia, a unit of Publicis of France, the world's fourth-biggest marketing-services group.

It predicted total advertising spending this year of $404 billion, up 4.7 per cent from 2004. In April, it predicted advertising spending would grow 5.4 per cent.

Its new forecast cuts $3.6 billion from spending in traditional media, but adds $1.2 billion to the internet. The internet's market share should rise from 3.6 per cent in 2004 to 4.1 per cent this year, 4.5 per cent in 2006 and 4.7 per cent in 2007, it said.

Smith said advertisers in developed markets were shifting money from TV to the internet, hampering the ability of networks to raise prices for advertising time.

The resistance among advertisers to price increases was highlighted this year when Procter & Gamble indicated it would cut the amount of money it spends to buy US TV in advance during a negotiating period known as the “upfront”.

“There is no longer that panic to get exposure on television that has underpinned the frightening inflation we have seen in TV in past decades,” Mr Smith said.

Tracking the shift of marketing dollars from TV would be tricky because companies are spending more on activities that are difficult to measure, he said.

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